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Adam Block, Kevin Van Dyke and Leah Dillard wrote a 

 titled “Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates” that was posted this week on the MHE website. During the first part of our video interview, Block discussed the financial effects of COVID-19 on providers, the Q2 net operating income of insurers, and the reason providers are struggling while insurers are “rolling in money.” In the second half, Block discussed what insurers are doing with their profits.

With premiums and payments pretty much holding steady and medical expenditures plummeting as elective procedures and other routine medical care came to a grinding halt, health insurers experienced a huge jump in net adjustment income in Q2 of this year. 

 and his colleagues discuss the increase and computed the relative difference with Q2 of 2019 in a paper posted on our website this week. 

So what are they doing with all that money?, we asked Block. 

In some cases they have advanced providers funds, said Block, an assistant professor of public health at New York Medical College of Health Sciences and Practice in Valhalla, New York, in the second half of our interview. In some cases, some providers have, in effect, received Q3 payment Block. 

“But that is not new funds,” said Block. “That is an advance on your salary. It’s not a raise.”

In other cases, insurers have moved to get rid of the normal lag between when a claim is filed and what the money flows to the providers.

The ACA medical-loss ratios of 80% and 85% are perhaps not as much of a factor as one might think, Block explained, because they are computed using a three-year rolling average. Eventually, the Q2 surge in profit might be offset by less favorable quarters for insurers in the future. Even if the medical-loss ratio limits were to kick in, Block says it would be quite some time before any money reaches individuals. “By the time the consumer receives any benefit it will be at least two or three years out.”

Block said he thinks that insurers should use the money to help providers. “Hopefully the plans will help make the providers whole,” he said. “They are ones taking the personal risk and seeing COVID patients.”  

Block and his colleagues wrote in their paper that the ACA market is “confused and inconsistent” as far as rate requests for next year, with some plans asking for very small increases (less than 1%) while Oscar and Fidelis in New York have requested rate increases of 15%. In the video interview, Block echoed thoughts, calling the rate requests “a mixed bag.” 

Videos

In this part two of two video series Adam Block discusses his recent article, “Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates.” 

What Are Health Plans Doing With Their Q2 Money?   

As a disease, COVID-19 has been the opposite of a leveler. It has disproportionately affected older people, Black Americans, and those with comorbidities. 

COVID-19’s financial consequences have also been uneven, as Adam Block discussed in a video interview with Managed Healthcare Executive® this week and in a 

 he wrote with Kevin Van Dyke and Leah Dillard posted on the our website yesterday. The paper is titled “Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates.

“We wrote this paper because we were seeing …headlines about how badly hospitals are doing — which was counterintuitive —and not too many headlines about how well the health plans were doing,” Block said.

Block and his colleagues computed the relative difference between 2019 Q2 net operating income and 2020 Q2 net operating income for five publicly traded national insurers. On average, 2020 Q2 net income was 136.7% higher than 2019 Q2 income, they said, and 2020 Q2 difference was a 136.7% increase.

Block says the big jump in net operating income is the result of the sudden decline in elective procedures and other routine medical care.

“It makes a lot of sense because if all of the elective procedures went away and we are all still paying same premiums that we were…earlier in the year, pre-COVID, that money all stays as retained earnings for the health plans.”

Publicly traded health plans are required to file quarterly earnings reports, so the just how well they are doing has come to light the past couple of weeks. “If you are health plan, you sort of don’t want to make it public that in an economy that is declining by 10% that you are rolling money,” said Block.

Health plans could offer rebates to its premium-paying customers; Block said he received a rebate from his auto insurer because he is driving less and because the accident rate is down because Americans, in general, are driving less because of social distancing, cancellations, and work from policies. They could also pass on the money to providers, who are struggling.

“If the network goes out of business, you don’t have much of a health plan.

In this part one of two video series, Adam Block, a New York Medical College assistant professor, discusses his recent contributed article to Managed Healthcare Executive titled "Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates."

Researcher Adam Block: Health Plans Are ‘Rolling in Money’ As Providers, Rest of Economy Struggle 

It is one thing to depend on claims that come in two or three months after a member has been hospitalized or gone to an emergency department. It is another thing to find out about it right away.

Carolyn Langer, M.D., senior vice president and chief medical officer of Fallon Health, prefers the latter.

“Having the real-time notification really enables us to be aware of these patients and engage them when they are at hospital” Langer said in a video interview with 

Fallon is getting those real-time reports from 

, a health IT company in suburban Salt Lake City that Fallon has been working with for about a month. Langer says Collective Medical sends notifications when members are admitted and discharged from the hospital and when they visit the emergency department.

The notifications help Fallon Health to “more proactively manage members and avert unnecessary ED visits and avoidable hospital stays.”

Fallon started using Collective Medical’s services this year. Langer says the timing was fortuitous because the navigators that Fallon had embedded at some hospitals and primary care practices could no longer work on site because of the pandemic. She adds in addition to notifying Fallon, Collective Medical supplies the health plan with some critical information about patients. Langer says even something as simple as having ab up-to-date phone number can make a difference in getting members follow-up care and services.

With only a few weeks of experience, Langer says it was too early to have any data on differences that Collective Medical might have made. She says that will come in six months to year. In meantime, she adds, “anecdotally, we are seeing some really amazing success stories.” Langer gave as an example a member who was dependent on a wheelchair who could go home after being discharged because a navigator had arranged for construction of a wheelchair ramp. 

Langer says apart from Collective Medical, Fallon has “robust” clinical integration teams that include nurse case managers, social workers as well as navigators. She says those teams’ years of experience have shown that a wide range of interventions addressing the social determinants of health can be “very impactful.” Among the interventions she listed were arranging for a primary care visit after hospital discharge, medication reconciliation (Fallon has a team of pharmacists who do that), housing services for people without homes, and transportation assistance.

In this part two of two series, Carolyn Langer, M.D., Fallon Health's chief medical officer, talks about Collective Medical and the advantages of real-time notifications of member hospital admissions and discharges and emergency department visits.


Fallon Chief Medical Officer Carolyn Langer Says Real-Time Notification Makes All the Difference

 to read "Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates."

Podcasts

This week on Tuning Into The C-Suite, Managed Healthcare Executive Senior Editor Peter Wehrwein speaks with Assistant Professor of Public Health at New York Medical College, Adam Block. The two discuss Block's recent article published in MHE, "Profits of Publicly Traded Health Plans Surge Amid Requests for Higher Rates" and more. 


Author | Briana Contreras

Articles

What Are Health Plans Doing With Their Q2 Money?

Researcher Adam Block: Health Plans Are ‘Rolling in Money’ As Providers, Rest of Economy Struggle

Fallon Chief Medical Officer Carolyn Langer Says Real-Time Notification Makes All the Difference

Adam Block of New York Medical College Speaks on Profits of Health Plans